Are We There Yet?

On March 29,2017 we discussed the Zweig Breadth Thrust.  A copy of that post is below.  The interesting part of that post is when you look at the DJIA projection.  If you apply the average gain of the ZBT to the low at Nov 2016 you hit a forecast of 22,500 11 months later in Oct 2017.   That is about where we are right now.   That forecast when applied to the S&P500 is 2,625 and we are not at that point yet.   But, we are not too far away.   Maybe if we take an average of the DJIA and the S&P500 we will get a better forecast. In any event, between the ZBT and the Long Term Picasso Cycles forecast of a potential November 2017 high, the caution light is on to watch your charts carefully for any intermediate term sell signals on the weekly and monthly charts.

 

Wednesday, March 29, 2017

Zweig Breadth Thrust

The Breadth Thrust indicator is a market momentum indicator. It was developed by Dr. Martin Zweig. The Breadth Thrust is calculated by dividing a 10-day exponential moving average of the number of advancing issues, by the number of advancing plus declining issues.

Interpretation

A "Breadth Thrust" occurs when, during a 10-day period, the Breadth Thrust indicator rises from below 40% to above 61.5%. A "Thrust" indicates that the stock market has rapidly changed from an oversold condition to one of strength, but has not yet become overbought.

According to Dr. Zweig, there have only been fourteen Breadth Thrusts since 1945 (as of the date of the original printing of this article ???). The average gain following these fourteen Thrusts was 24.6% in an average time-frame of eleven months. Dr. Zweig also points out that most bull markets begin with a Breadth Thrust.

The last ZBT that we noted, occurred starting Nov 8,2016.
If we apply the the average gain of 24.6% to the average length of 11 months we get:
DJIA         Nov. 2016     18,000 --->22,500 forecast 11 months later in Oct.2017
S&P500    Nov. 2016       2,100 --->  2.625 forecast 11 months later in Oct.2017 

Will the stock market possibly continue straight up until Oct, 2017?  We doubt it.  In fact, the LT Picasso Cycle dates suggest an April high +/-, an August low +/- and then a Nov high +/-.  This last high in Nov is very close to the ZBT average forecast high in Oct. 2017.

Keep following JustSignals using Twitter, @StockTwits or Follow By Email. Just submit your email address in the box on the Blog homepage. This has been posted for Educational Purposes Only.   Do your own work and consult with Professionals before making any investment decisions.  Past performance is not indicative of future results